SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D. C. 20549

FORM 10-Q

[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE
ACT OF 1934

For the quarterly period ended June 30, 1999
-------------

[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE
ACT OF 1934

For the transition period from to .
--------------- ---------------

Commission File Number: 1-8389
------

PUBLIC STORAGE, INC.
--------------------
(Exact name of registrant as specified in its charter)

California 95-3551121
- ---------------------------------------- ----------------------
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification Number)

701 Western Avenue, Glendale, California 91201-2394
- ---------------------------------------- ----------------------
(Address of principal executive offices) (Zip Code)

Registrant's telephone number, including area code: (818) 244-8080.
--------------

Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter period that the registrant was
required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days.

[ X ] Yes [ ] No

Indicate the number of shares outstanding of each of the issuer's classes of
common stock, as of August 5, 1999:

Common Stock, $.10 par value, 129,322,991 shares outstanding
- ------------------------------------------------------------

Class B Common Stock, $.10 Par Value - 7,000,000 shares
- -------------------------------------------------------

Equity Stock, Series A, $.01 Par Value - 225,000 shares
- -------------------------------------------------------

PUBLIC STORAGE, INC.

INDEX

Pages
-----
PART I. FINANCIAL INFORMATION

Item 1. Financial Statements

Condensed Consolidated Balance Sheets at
June 30, 1999 and December 31, 1998 1

Condensed Consolidated Statements of Income for the
Three and Six Months Ended June 30, 1999 and 1998 2

Condensed Consolidated Statements of Shareholders' Equity
for the Six Months Ended June 30, 1999 3

Condensed Consolidated Statements of Cash Flows
for the Six Months Ended June 30, 1999 and 1998 4 - 5

Notes to Condensed Consolidated Financial Statements 6 - 17

Item 2. Management's Discussion and Analysis of
Financial Condition and Results of Operations 18 - 29

Item 3. Quantitative and Qualitative Disclosures about Market Risk 29

PART II. OTHER INFORMATION (Items 2, 3 and 5 are not applicable)

Item 1. Legal Proceedings 30

Item 4. Submission of Matters to a Vote of Security Holders 30 - 31

Item 6. Exhibits and Reports on Form 8-K 31 - 36

PUBLIC STORAGE, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(AMOUNTS IN THOUSANDS, EXCEPT SHARE DATA)

JUNE 30, DECEMBER 31,
1999 1998
-------------- --------------
(Unaudited)
ASSETS
------

Cash and cash equivalents.......................................... $ 67,935 $ 51,225
Real estate facilities, at cost:
Land.......................................................... 1,015,983 803,226
Buildings..................................................... 2,687,883 2,159,065
-------------- --------------
3,703,866 2,962,291
Accumulated depreciation...................................... (467,757) (411,176)
-------------- --------------
3,236,109 2,551,115
Construction in process....................................... 115,874 83,138
-------------- --------------
3,351,983 2,634,253

Investment in real estate entities................................. 419,883 450,513
Intangible assets, net............................................. 198,979 203,635
Notes receivable from affiliates................................... 25,296 5,415
Other assets....................................................... 83,867 58,863
-------------- --------------
Total assets......................................... $ 4,147,943 $ 3,403,904
============== ==============

LIABILITIES AND SHAREHOLDERS' EQUITY
------------------------------------

Notes payable...................................................... $ 172,551 $ 81,426
Accrued and other liabilities...................................... 95,253 63,813
-------------- --------------
Total liabilities.................................... 267,804 145,239

Minority interest.................................................. 151,197 139,325

Commitments and contingencies

Shareholders' equity:
Preferred Stock, $0.01 par value, 50,000,000 shares authorized,
11,138,850 shares issued and outstanding (11,129,650 issued and
outstanding at December 31, 1998), at liquidation preference:
Cumulative Preferred Stock, issued in series.............. 1,098,900 868,900
Common Stock, $0.10 par value, 200,000,000 shares
authorized,129,307,724 shares issued and outstanding
(115,965,945 at December 31, 1998).......................... 12,931 11,598
Class B Common Stock, $0.10 par value, 7,000,000 shares
authorized and issued....................................... 700 700
Paid-in capital............................................... 2,523,362 2,178,465
Cumulative net income......................................... 937,581 802,088
Cumulative distributions paid................................. (844,532) (742,411)
-------------- --------------
Total shareholders' equity................................ 3,728,942 3,119,340
-------------- --------------
Total liabilities and shareholders' equity........... $ 4,147,943 $ 3,403,904
============== ==============

See accompanying notes.
1

PUBLIC STORAGE, INC.
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
(AMOUNTS IN THOUSANDS, EXCEPT PER SHARE DATA)

(UNAUDITED)

For the Three Months Ended For the Six Months Ended
June 30, June 30,
--------------------------------- ---------------------------------
1999 1998 1999 1998
------------ ------------ ------------ ------------
REVENUES:
Rental income:

Self-storage facilities............ $ 149,745 $ 119,887 $ 278,774 $ 231,565
Commercial properties.............. 1,948 1,715 3,862 19,396
Portable self-storage.............. 6,448 6,118 11,876 11,289
Equity earnings of real estate entities. 9,347 7,317 17,469 9,936
Facility management fee................. 1,409 1,652 2,823 3,417
Interest and other income............... 3,557 4,352 5,920 8,004
------------ ------------ ------------ ------------
172,454 141,041 320,724 283,607
------------ ------------ ------------ ------------
EXPENSES:
Cost of operations:
Self-storage facilities............ 45,602 35,892 86,231 70,838
Commercial properties.............. 631 654 1,269 6,502
Portable self-storage.............. 9,383 14,460 18,747 29,513
Cost of facility management............ 217 268 472 554
Depreciation and amortization.......... 33,519 25,192 62,493 53,411
General and administrative............. 2,617 2,226 4,628 4,562
Interest expense....................... 2,530 933 3,734 2,095
------------ ------------ ------------ ------------
94,499 79,625 177,574 167,475
------------ ------------ ------------ ------------

Income before minority interest........ 77,955 61,416 143,150 116,132

Minority interest in income............ (4,304) (4,217) (7,657) (10,569)
------------ ------------ ------------ ------------

NET INCOME................................ $ 73,651 $ 57,199 $ 135,493 $ 105,563
============ ============ ============ ============
NET INCOME ALLOCATION:
Allocable to preferred shareholders..... $ 23,824 $ 20,129 $ 45,354 $ 40,269
Allocable to common shareholders........ 49,827 37,070 90,139 65,294
------------ ------------ ------------ ------------
$ 73,651 $ 57,199 $ 135,493 $ 105,563
============ ============ ============ ============
PER COMMON SHARE:
Net income per share - Basic............ $ 0.39 $ 0.33 $ 0.73 $ 0.58
============ ============ ============ ============
Net income per share - Diluted.......... $ 0.39 $ 0.32 $ 0.73 $ 0.58
============ ============ ============ ============
Weighted average common shares - Basic.. 128,904 113,970 123,793 111,731
============ ============ ============ ============
Weighted average common shares - Diluted 129,250 114,430 124,133 112,246
============ ============ ============ ============

See accompanying notes.
2

PUBLIC STORAGE, INC.
CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDER'S EQUITY
(AMOUNTS IN THOUSANDS, EXCEPT SHARE AMOUNTS)

(UNAUDITED)

Cumulative
Senior Class B
Preferred Common Stock Common Stock Paid-in
Stock Capital
-------------- -------------- -------------- --------------

Balances at December 31, 1998.......................... $ 868,900 $ 11,598 $ 700 $ 2,178,465

Issuance of common stock:
In connection with the Storage Trust merger
(13,009,485 shares)............................... - 1,301 - 345,922
Acquisition of minority interest (568,761 shares) - 56 - 14,434
Conversion of OP units (54,605 shares) ............. - 5 - 1,452
Exercise of stock options (399,155 shares).......... - 40 - 8,043

Repurchase of common stock (690,227 shares) ........... - (69) - (17,509)

Issuance of preferred stock:
Series K and Series L (9,200 shares)............... 230,000 - - (7,445)

Net income............................................. - - - -

Cash distributions:
Cumulative Senior Preferred Stock .................. - - - -
Common Stock........................................ - - - -
-------------- -------------- -------------- --------------

Balances at June 30, 1999.............................. $ 1,098,900 $ 12,931 $ 700 $ 2,523,362
============== ============== ============== ==============

Total
Cumulative Cumulative Shareholders'
Net Income Distributions Equity
-------------- -------------- --------------

Balances at December 31, 1998.......................... $ 802,088 $ (742,411) $ 3,119,340

Issuance of common stock:
In connection with the Storage Trust merger
(13,009,485 shares)............................... - - 347,223
Acquisition of minority interest (568,761 shares) - - 14,490
Conversion of OP units (54,605 shares) ............. - - 1,457
Exercise of stock options (399,155 shares).......... - - 8,083

Repurchase of common stock (690,227 shares) ........... - - (17,578)

Issuance of preferred stock:
Series K and Series L (9,200 shares)............... - - 222,555

Net income............................................. 135,493 - 135,493

Cash distributions:
Cumulative Senior Preferred Stock .................. - (45,354) (45,354)
Common Stock........................................ - (56,767) (56,767)
-------------- -------------- --------------

Balances at June 30, 1999.............................. $ 937,581 $ (844,532) $ 3,728,942
============== ============== ==============

See accompanying notes.
3

PUBLIC STORAGE, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(AMOUNTS IN THOUSANDS)

(UNAUDITED)

For the Six Months Ended
June 30,
---------------------------------
1999 1998
-------------- --------------
CASH FLOWS FROM OPERATING ACTIVITIES:

Net income.................................................................. $ 135,493 $ 105,563
Adjustments to reconcile net income to net cash provided by
operating activities:
Depreciation and amortization............................................. 62,493 53,411
Depreciation included in equity earnings of real estate entities.......... 9,574 6,639
Minority interest in income............................................... 7,657 10,569
-------------- --------------
Total adjustments..................................................... 79,724 70,619
-------------- --------------
Net cash provided by operating activities......................... 215,217 176,182
-------------- --------------

CASH FLOWS FROM INVESTING ACTIVITIES:
Principal payments received on notes receivable from affiliates........... 26,818 4,375
Notes receivable from affiliates.......................................... (29,500) (33,000)
Capital improvements to real estate facilities............................ (10,156) (10,336)
Construction in process................................................... (45,238) (34,306)
Acquisition of minority interests in consolidated real estate partnerships (14,654) (10,816)
Proceeds from the liquidation of real estate and real estate investments.. 8,417 10,275
Acquisition of investment in real estate entities......................... (50,456) (46,041)
Acquisition of real estate facilities..................................... (5,243) (47,392)
Acquisition cost of business combinations................................. (171,896) (10,014)
Investment in portable self-storage business.............................. - (10,655)
Refund of deposit on real estate purchase................................. - 12,500
Reduction in cash due to a change in accounting method with respect to PS
Business Parks, Inc. (Note 2) .......................................... - (11,259)
-------------- --------------
Net cash used in investing activities............................. (291,908) (186,669)
-------------- --------------

CASH FLOWS FROM FINANCING ACTIVITIES:
Repayment of borrowings on the line of credit............................. - (7,000)
Principal payments on notes payable....................................... (8,875) (10,302)
Net proceeds from the issuance of common stock............................ 8,083 237,434
Net proceeds from the issuance of preferred stock......................... 222,555 -
Repurchase of common stock................................................ (17,578) (12,991)
Distributions paid to shareholders........................................ (102,121) (90,075)
Distributions from operations to minority interests in real estate entities (12,472) (17,596)
Net reinvestment (divestment) by minority interests in consolidated real
estate entities......................................................... (2,068) 51,464
Other..................................................................... 5,877 805
-------------- --------------
Net cash provided by financing activities......................... 93,401 151,739
-------------- --------------
Net increase in cash and cash equivalents..................................... 16,710 141,252
Cash and cash equivalents at the beginning of the period...................... 51,225 41,455
-------------- --------------
Cash and cash equivalents at the end of the period............................ $ 67,935 $ 182,707
============== ==============

See accompanying notes.
4

PUBLIC STORAGE, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(AMOUNTS IN THOUSANDS)

(UNAUDITED)

(CONTINUED)

For the Six Months Ended
June 30,
-------------------------------
1999 1998
------------- -------------

SUPPLEMENTAL SCHEDULE OF NON-CASH INVESTING AND FINANCING ACTIVITIES:

Assets and liabilities acquired with respect to business combinations:

Real estate facilities.............................................................. $ (720,197) $ (81,295)
Construction in process............................................................. (11,449) -
Investment in real estate entities.................................................. (356) -
Mortgage notes receivable........................................................... (6,739) -
Other assets........................................................................ (1,633) (294)
Accrued and other liabilities....................................................... 22,824 2,366
Minority interest................................................................... 32,201 35,334
Notes payable....................................................................... 100,000 -

Deconsolidation of PS Business Parks Inc. (Note 2):
Investments in real estate entities................................................. - (219,224)
Real estate facilities, net of accumulated depreciation............................. - 433,446
Other assets........................................................................ - 2,048
Accrued and other liabilities....................................................... - (10,106)
Notes payable....................................................................... - (14,526)
Minority interest................................................................... - (202,897)

Notes receivable issued in connection with real estate dispositions...................... (10,460) -

Other assets received in connection with real estate dispositions........................ (3,800) -

Assets and liabilities assumed in connection with acquisitions of real estate
facilities:
Cancellation of mortgage notes receivable........................................... - 2,495
Assumption of note payable.......................................................... - 14,526
Minority interest................................................................... - 1,205

Reduction to investment in real estate entities in connection with business
combinations and acquisitions of real estate facilities............................... 66,230 20,585

Disposition of real estate facilities in exchange for notes receivable and other assets. 22,677 -

Acquisition of real estate facilities in exchange for the assumption of notes payable
and increase in minority interest..................................................... - (18,753)

Acquisition of minority interest and real estate in exchange for common stock:
Real estate facilities.............................................................. (17,155) (9,400)
Minority interest................................................................... (13,446) (12,485)

Issuance of common stock:
In connection with business combinations............................................ 347,223 13,817
In connection with the conversion of Convertible Preferred Stock.................... - 1,281
To acquire interests in real estate entities........................................ - 17,133
To acquire minority interest in consolidated real estate entities................... 15,947 11,070

Conversion of 8.25% convertible preferred stock......................................... - (1,281)
Acquisition of investment in real estate entities for common stock...................... - (17,133)

See accompanying notes.
5

PUBLIC STORAGE, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
JUNE 30, 1999
(UNAUDITED)

1. Description of the business
---------------------------

Public Storage, Inc. (the "Company") is a California corporation,
which was organized in 1980. The Company is a fully integrated,
self-administered and self-managed real estate investment trust ("REIT")
that acquires, develops, owns and operates self-storage facilities which
offer self-storage spaces for lease, usually on a month-to-month basis, for
personal and business use. The Company invests in real estate facilities
primarily through the acquisition of wholly owned facilities combined with
the acquisition of equity interests in real estate entities owning real
estate facilities. At June 30, 1999, the Company had direct and indirect
equity interests in 1,434 properties located in 38 states, including 1,306
self-storage facilities, 121 commercial properties, and seven industrial
facilities developed for use in the operations of Public Storage Pickup and
Delivery. All of the self-storage facilities are operated by the Company
under the "Public Storage" name, while the commercial properties are
operated by PS Business Parks, Inc., an affiliated public REIT, and its
operating partnership (the REIT and partnership are collectively referred
to as "PSBP").

In 1996 and 1997, the Company organized Public Storage Pickup and
Delivery, Inc. as a separate corporation and a related partnership (the
corporation and partnership are collectively referred to as "PSPUD") to
operate a portable self-storage business that rents storage containers to
customers for storage generally in leased central warehouses. At June 30,
1999, PSPUD operated 36 facilities in 11 states.

2. Summary of significant accounting policies
------------------------------------------

Basis of presentation
---------------------
The accompanying unaudited condensed consolidated financial
statements have been prepared in accordance with generally accepted
accounting principles for interim financial information and with
instructions to Form 10-Q and Article 10 of Regulation S-X. Accordingly,
they do not include all of the information and footnotes required by
generally accepted accounting principles for complete financial statements.
The preparation of the consolidated financial statements in conformity with
generally accepted accounting principles requires management to make
estimates and assumptions that affect the amounts reported in the
consolidated financial statements and accompanying notes. Actual results
could differ from estimates. In the opinion of management, all adjustments
(consisting of normal recurring accruals) necessary for a fair presentation
have been included. Operating results for the three and six months ended
June 30, 1999 are not necessarily indicative of the results that may be
expected for the year ended December 31, 1999. For further information,
refer to the consolidated financial statements and footnotes thereto
included in the Company's annual report on Form 10-K for the year ended
December 31, 1998.

The consolidated financial statements include the accounts of the
Company, PSPUD, and 33 controlled limited partnerships including an
operating partnership owning the properties acquired from Storage Trust
Realty, Inc. (collectively, the "Consolidated Entities"). Collectively, the
Company and the Consolidated Entities own a total of 1,199 real estate
facilities, consisting of 1,191 self-storage facilities, one commercial
property, and seven industrial facilities for use by PSPUD.

At June 30, 1999, the Company also has equity investments in 15
other affiliated limited partnerships whose principal business is the
ownership of 115 self-storage facilities in aggregate, which are managed by
the Company. In addition, the Company has an ownership interest in PSBP,
which owns and operates 120 commercial properties. The Company does not
control these entities; accordingly, the Company's investments in these
entities are accounted for using the equity method.

From the time of PSBP's formation through March 31, 1998, the
Company consolidated the accounts of PSBP in its financial statements.
During the second quarter of 1998, the Company's ownership interest in PSBP

was reduced below 50% and, accordingly, the Company ceased to have a
controlling interest in PSBP. As a result, the Company, effective April 1,
1998, no longer includes the accounts of PSBP in its consolidated financial
statements and has accounted for its investment using the equity method.
The income statement for all periods after March 31, 1998 include the
Company's equity in income of PSBP. Further, commercial property operations
for the periods after March 31, 1998 reflect only the commercial property
operations of facilities owned by the Company which have both self-storage
and commercial use combined at the same property location.

Use of estimates
----------------
The preparation of the consolidated financial statements in
conformity with generally accepted accounting principles requires
management to make estimates and assumptions that affect the amounts
reported in the consolidated financial statements and accompanying notes.
Actual results could differ from those estimates.

Income taxes
------------
For all taxable years subsequent to 1980, the Company qualified
and intends to continue to qualify as a REIT, as defined in Section 856 of
the Internal Revenue Code. As a REIT, the Company is not taxed on that
portion of its taxable income which is distributed to its shareholders,
provided that the Company meets certain tests. The Company believes it will
meet these tests during 1999 and, accordingly, no provision for income
taxes has been made in the accompanying financial statements.

Financial instruments
---------------------
For purposes of financial statement presentation, the Company
considers all highly liquid debt instruments purchased with a maturity of
three months or less to be cash equivalents.

Real estate facilities
----------------------
Real estate facilities are recorded at cost. Depreciation is
computed using the straight-line method over the estimated useful lives of
the buildings and improvements, which are generally between 5 and 25 years.

Allowance for possible losses
-----------------------------
The Company has no allowance for possible losses relating to any
of its real estate investments, including notes receivable. The need for
such an allowance is evaluated by management by means of periodic reviews
of its investment portfolio.

Intangible assets
-----------------
Intangible assets consist of property management contracts
($165,000,000) and the cost over the fair value of net tangible and
identifiable intangible assets ($67,726,000) acquired. Intangible assets
are amortized by the straight-line method over 25 years. At June 30, 1999,
intangible assets are net of accumulated amortization of $33,747,000
($29,091,000 at December 31, 1998). Included in depreciation and
amortization expense for the three and six months ended June 30, 1999 and
1998 is $2,328,000 and $4,656,000, respectively, related to the
amortization of intangible assets.

Revenue and expense recognition
-------------------------------
Property rents are recognized as earned. Equity in earnings of
real estate entities are recognized based on the Company's ownership
interest in the earnings of each of the unconsolidated real estate
entities. Advertising costs are expensed as incurred.

Environmental costs
-------------------
The Company's policy is to accrue environmental assessments and/or
remediation cost when it is probable that such efforts will be required and
the related costs can be reasonably estimated. The Company's current
practice is to conduct environmental investigations in connection with
property acquisitions. As a result of environmental investigations of its
properties, the Company recorded an amount, which in management's best
estimate will be sufficient to satisfy anticipated costs of known
investigation and remediation requirements. Although there can be no
assurance, the Company is not aware of any environmental contamination of
any of its facilities which individually or in the aggregate would be
material to the Company's overall business, financial condition, or results
of operations.

Net income per common share
---------------------------
In 1997, the Financial Accounting Standards Board issued Statement
No. 128, Earning per Share. Statement 128 replaced the calculation of
primary and fully diluted net income per share with basic and diluted net
income per share. Unlike primary net income per share, basic net income per
share excludes any dilutive effects of options, warrants or convertible
securities that are convertible into common shares of the Company.

Diluted net income per common share is computed using the weighted
average common shares outstanding, plus the impact of stock options. The
Class B Common Stock is not included in the determination of net income per
common share because all contingencies required for the conversion to
common stock have not been satisfied as of June 30, 1999. In addition, the
inclusion of the Company's convertible preferred stock in the determination
of net income per common share has been determined to be anti-dilutive for
the six months ended June 30, 1998.

In computing earnings per common share, preferred stock dividends
totaling $23,824,000 and $20,129,000 for the three months ended June 30,
1999 and 1998, respectively, and $45,354,000 and $40,269,000 for the six
months ended June 30, 1999 and 1998, respectively, reduced income available
to common shareholders.

Stock-based compensation
------------------------
In October 1995, the FASB issued SFAS No. 123 "Accounting for
Stock-Based Compensation" ("Statement 123") which provides companies an
alternative to accounting for stock-based compensation as prescribed under
APB Opinion No. 25 (APB 25). Statement 123 encourages, but does not require
companies to recognize expense for stock-based awards based on their fair
value at date of grant. Statement 123 allows companies to continue to
follow existing accounting rules (intrinsic value method under APB 25)
provided that pro-forma disclosures are made of what net income and
earnings per share would have been had the new fair value method been used.
The Company has elected to adopt the disclosure requirements of Statement
123 but will continue to account for stock-based compensation under APB 25.

Reclassifications
-----------------
Certain reclassifications have been made to the consolidated
financial statements for 1998 in order to conform to the 1999 presentation.

3. Business Combinations
---------------------

On March 12, 1999, the Company completed a merger transaction with
Storage Trust Realty, Inc. ("Storage Trust"). As a result of the merger,
the Company acquired interests in 215 self-storage facilities located in 16
states totaling approximately 12 million net rentable square feet. In the
merger, each share of beneficial interest of Storage Trust was exchanged
for 0.86 shares of the Company's common stock (approximately 13,009,485
shares of the Company's common stock were issued and approximately an
additional 1,011,963 shares were reserved for issuance upon conversion of
limited partnership units in Storage Trust's operating partnership). The
aggregate acquisition cost of the merger was approximately $575.7 million,
consisting of the issuance of the Company's common stock of approximately
$347.2 million, cash of approximately $105.2 million, the assumption of
debt in the amount of $100.0 million, and the Company's pre-existing
investment in Storage Trust of approximately $23.3 million.

On June 30, 1999, the Company acquired all of the limited
partnership interests in 13 affiliated partnerships. As a result of the
Company's increased ownership interest and control of the partnerships, the
Company began to consolidate the accounts of these partnerships. The total
consideration was approximately $109.7 million, consisting of cash of
approximately $66.7 million and the Company's pre-existing investment in
the Partnerships of approximately $43.0 million.

The merger with Storage Trust was structured as a tax-free
transaction. The merger and acquisition of affiliated limited partner
interests have been accounted for using the purchase method. Accordingly,
allocations of the total acquisition cost to the net assets acquired were
made based upon the fair value of such assets and liabilities assumed, as
follows:

Storage Trust Partnership
Merger Acquisitions Total
------------ ------------ ------------
(Amounts in thousands)

Real estate facilities.................. $ 598,577 $ 121,620 $ 720,197
Construction in process................. 11,449 - 11,449
Investment in real estate entities...... 356 - 356
Mortgage notes receivable............... 6,739 - 6,739
Other assets............................ 1,309 324 1,633
Accrued liabilities..................... (15,745) (7,079) (22,824)
Minority interest....................... (27,009) (5,192) (32,201)
------------ ------------ ------------
$ 575,676 $ 109,673 $ 685,349
============ ============ ============

The historical operating results of the above business
combinations prior to their dates of acquisition have not been included in
the Company's historical operating results. Pro forma selected financial
data for the six months ended June 30, 1999 and 1998 as though the above
acquisitions had been effective at January 1, 1998 are as follows:

Six Months Ended Six Months Ended
(In thousands, except per share data) June 30, 1999 June 30, 1998
- ------------------------------------------ ---------------- ----------------
Revenues.................................. $345,375 $330,493
Net income................................ 138,641 113,255
Net income per common share (Basic)....... 0.72 0.59
Net income per common share (Diluted)..... 0.72 0.58

The pro forma data does not purport to be indicative of operations
that would have occurred had the merger and acquisition of limited
partnership interests occurred at the beginning of each period or future
results of operations of the Company. Certain pro forma adjustments were
made to the combined historical amounts to reflect (i) expected reductions
in general and administrative expenses, (ii) certain significant
acquisitions made by Storage Trust in 1998, (iii) estimated increased
interest costs to finance the cash portion of the acquisition cost, and
(iv) estimated increased depreciation expense.

4. Real estate facilities
----------------------

Activity in real estate facilities during 1999 is as follows:

In thousands
---------------
Operating facilities, at cost
Balance at December 31, 1998...................... $ 2,962,291
Property acquisitions - business combinations..... 720,197
Facility contributed to development joint venture. (11,194)
Disposition of facilities......................... (23,933)
Property acquisitions - third party purchases..... 5,243
Developed facilities.............................. 23,951
Acquisition of minority interest.................. 17,155
Capital improvements.............................. 10,156
---------------
Balance at June 30, 1999.......................... 3,703,866
---------------
Accumulated depreciation:
Balance at December 31, 1998...................... (411,176)
Additions during the year......................... (57,837)
Disposition of facilities......................... 1,256
---------------
Balance at June 30, 1999.......................... (467,757)
---------------
Construction in progress:
Balance at December 31, 1998...................... 83,138
Current development............................... 45,238
Property acquisitions - merger with Storage Trust. 11,449
Developed facilities.............................. (23,951)
---------------
Balance at June 30, 1999.......................... 115,874
---------------

Total real estate facilities at June 30, 1999..... $ 3,351,983
===============

Construction in progress at June 30, 1999 includes 24 self-storage
facilities, five expansions of existing self-storage facilities, and nine
industrial facilities, which will be utilized as portable self-storage
facilities. The Company's policy is to capitalize interest incurred on debt
during the course of construction of its self-storage and industrial
facilities. Interest capitalized during the three and six months ended June
30, 1999 was $988,000 and $1,946,000, respectively, compared with
$1,023,000 and $2,280,000 for the same periods in 1998.

Effective April 30, 1999, the Company sold six properties acquired
in the merger with Storage Trust for approximately $10.5 million and
granted the acquiror an option exercisable in December 1999 to acquire an
additional eight properties acquired in the merger with Storage Trust for
approximately $18.8 million. The Company is now leasing these eight
properties to the acquiror. There was no gain or loss on this transaction.

In addition, during the six months ended June 30, 1999, the
Company disposed of a developed commercial facility, two self-storage
facilites through condemnation proceedings, and three plots of land for an
aggregate of approximately $12.2 million. There was no gain or loss on
these transactions.

5. Investment in real estate entities
----------------------------------

At June 30, 1999, the Company's investment in real estate entities
consists of (i) limited and general partnership interests in approximately
14 affiliated partnerships, which principally own self-storage facilities,
(ii) the Company's ownership interest in a joint venture, established to
develop and operate self-storage facilities and (iii) the Company's
ownership interest in PSBP. Such interests are accounted for using the
equity method of accounting.

In April 1997, the Company formed a joint venture partnership with
an institutional investor (the "Joint Venture") to participate in the
development of approximately $220 million of self-storage facilities. The
Joint Venture has a total of 30 opened facilities with a total cost of
$151.0 million at June 30, 1999, and has 13 projects in process with an
aggregate cost incurred to date of approximately $40.1 million ($17.9
million estimated to complete) at June 30, 1999.

At June 30, 1999, the Joint Venture is reviewing an additional six
projects ($20.7 million incurred at June 30, 1999, with remaining costs to
complete of $5.8 million). One of these projects has been approved
subsequent to June 30, 1999 (through August 9, 1999), and upon approval of
the remaining five facilities, the Joint Venture will be fully committed.
These six projects include one completed facility and five facilities under
construction. At June 30, 1999, approximately $16.4 million is included in
construction in process and approximately $4.3 million is included in real
estate facilities with respect to these six projects. As the projects are
approved, the construction costs will be transferred to the Joint Venture.

During the six months ended June 30, 1999, the Company recognized
earnings from its investments totaling $17,469,000. Included in equity in
earnings of real estate entities for the six months ended June 30, 1999 is
the Company's share of depreciation expense totaling $9,574,000. Summarized
combined financial data (based on historical cost) with respect to those
unconsolidated real estate entities in which the Company had an ownership
interest at June 30, 1999 are as follows:

For the six months ended June 30, 1999
------------------------------------------------------------------------------
Other Development
Equity Investments Joint Venture PSBP (A) Total
------------------ ------------------ ------------------ ------------------
(Amounts in thousands)

Rental income......................... $ 24,594 $ 6,205 $ 59,976 $ 90,775
Other income.......................... 638 270 523 1,431
------------------ ------------------ ------------------ ------------------
Total revenues........................ 25,232 6,475 60,499 92,206
------------------ ------------------ ------------------ ------------------

Cost of operations.................... 7,969 3,237 17,031 28,237
Depreciation.......................... 3,123 1,881 14,047 19,051
Other expenses........................ 2,606 45 3,324 5,975
------------------ ------------------ ------------------ ------------------
Total expenses........................ 13,698 5,163 34,402 53,263
------------------ ------------------ ------------------ ------------------

Net income before minority interest... 11,534 1,312 26,097 38,943
Minority interest..................... - - (6,400) (6,400)
------------------ ------------------ ------------------ ------------------
Net income............................ $ 11,534 $ 1,312 $ 19,697 $ 32,543
================== ================== ================== ==================

At June 30, 1999:
- -----------------
Real estate, net ..................... $ 117,216 $ 187,471 $ 764,127 $ 1,068,814
Total assets.......................... 152,815 203,142 784,622 1,140,579
Total liabilities..................... 62,998 20,006 65,464 148,468
Minority interest..................... - - 168,436 168,436
Total equity.......................... 89,817 183,136 550,722 823,675

The Company's investment (book value)
at June 30, 1999.................... $ 114,236 $ 54,940 $ 250,707 $ 419,883

The Company's effective average
ownership interest at June 30, 1999. 40% 30% 41% 39%

(A) $862,000 of PSBP's net income for the six months ended June
30, 1999 was allocated to preferred shareholders.

6. Revolving line of credit
------------------------

As of June 30, 1999, the Company had no borrowings on its
unsecured credit agreement with a group of commercial banks. The credit
agreement (the "Credit Facility") has a borrowing limit of $150 million and
an expiration date of July 31, 2001. The expiration date may be extended by
one year on each anniversary of the credit agreement. Interest on
outstanding borrowings is payable monthly. At the option of the Company,
the rate of interest charged is equal to (i) the prime rate or (ii) a rate
ranging from the London Interbank Offered Rate ("LIBOR") plus 0.40% to
LIBOR plus 1.10% depending on the Company's credit ratings and coverage
ratios, as defined. In addition, the Company is required to pay a quarterly
commitment fee of 0.250% (per annum) of the unused portion of the Credit
Facility. The Credit Facility allows the Company, at its option, to request
the group of banks to propose the interest rate they would charge on
specific borrowings not to exceed $50 million. However, in no case may the
interest rate proposal be greater than the amount provided by the Credit
Facility.

7. Minority interest
-----------------

In consolidation, the Company classifies ownership interests in
the net assets of each of the Consolidated Entities, other than its own, as
minority interest on the consolidated financial statements. Minority
interest in income consists of the minority interests' share of the

operating results of the Company relating to the consolidated operations of
the Consolidated Entities, except as described below with respect to
minority interest acquired in the merger with Storage Trust.

In connection with the merger with Storage Trust, minority
interest increased by approximately $27.0 million, reflecting the fair
value of 1,011,963 operating partnership units ("OP Units") in Storage
Trust's operating partnership owned by minority interests. As of June 30,
1999, 957,358 of such units are outstanding. OP Units are convertible on a
one-for-one basis (subject to certain limitations) into common shares of
the Company at the option of the unitholder. Minority interest in income
with respect to OP Units reflects the OP Units' share of the net income of
the Company, with net income allocated to minority interests with respect
to weighted average outstanding OP Units on a per unit basis equal to
diluted earnings per common share.

During the six months ended June 30, 1999, the Company acquired
limited partnership interests in certain of the Consolidated Entities in
several transactions for an aggregate cost of $30.6 million, consisting of
approximately $14.7 million in cash and $15.9 million in the issuance of
the Company's common stock. These transactions had the effect of reducing
minority interest by approximately $13.4 million. The excess of the cost
over the underlying book value ($17.2 million) has been allocated to real
estate facilities in consolidation.

8. Shareholders' equity
--------------------

Preferred stock
---------------
At June 30, 1999 and December 31, 1998, the Company had the
following series of Preferred Stock outstanding:

At June 30, 1999 At December 31, 1998
------------------------------ ------------------------------
Dividend Shares Shares
Series Rate Outstanding Carrying Amount Outstanding Carrying Amount
- -------------------------------- ---------- ----------- --------------- ----------- ---------------

Series A ....................... 10.000% 1,825,000 $ 45,625,000 1,825,000 $ 45,625,000
Series B ....................... 9.200% 2,386,000 59,650,000 2,386,000 59,650,000
Series C........................ Adjustable 1,200,000 30,000,000 1,200,000 30,000,000
Series D........................ 9.500% 1,200,000 30,000,000 1,200,000 30,000,000
Series E........................ 10.000% 2,195,000 54,875,000 2,195,000 54,875,000
Series F........................ 9.750% 2,300,000 57,500,000 2,300,000 57,500,000
Series G ....................... 8.875% 6,900 172,500,000 6,900 172,500,000
Series H ....................... 8.450% 6,750 168,750,000 6,750 168,750,000
Series I ....................... 8.625% 4,000 100,000,000 4,000 100,000,000
Series J ....................... 8.000% 6,000 150,000,000 6,000 150,000,000
Series K ....................... 8.250% 4,600 115,000,000 - -
Series L ....................... 8.250% 4,600 115,000,000 - -
----------- --------------- ----------- ---------------
Total Cumulative Senior
Preferred Stock................. 11,138,850 $ 1,098,900,000 11,129,650 $ 868,900,000
=========== =============== =========== ===============

On January 19, 1999, the Company issued 4.6 million depositary
shares (each representing 1/1,000 of a share) of its Preferred Stock,
Series K, raising net proceeds of approximately $111.3 million. On March
10, 1999, the Company issued 4.6 million depositary shares (each
representing 1/1,000 of a share) of its Preferred Stock, Series L, raising
net proceeds of approximately $111.3 million.

Holders of the Company's preferred stock will not be entitled to
vote on most matters, except under certain conditions and as noted above.
In the event of a cumulative arrearage equal to six quarterly dividends or
failure by the Company to maintain a Debt Ratio (as defined) of 50% or
less, the holders of all outstanding series of preferred stock (voting as a
single class without regard to series) will have the right to elect two
additional members to serve on the Company's Board of Directors until all
events of default have been cured. At June 30, 1999, there were no
dividends in arrears and the Debt Ratio was 4.2%.

Except under certain conditions relating to the Company's
qualification as a REIT, the Senior Preferred Stock are not redeemable
prior to the following dates: Series A - September 30, 2002, Series B March
31, 2003, Series C - June 30, 1999, Series D - September 30, 2004, Series E
- January 31, 2005, Series F - April 30, 2005, Series G - December 31,
2000, Series H - January 31, 2001, Series I - October 31, 2001, Series J -
August 31, 2002, Series K - January 19, 2004 and Series L - March 10, 2004.
On or after the respective dates, each of the series of Senior Preferred
Stock will be redeemable, at the option of the Company, in whole or in
part, at $25 per share (or depositary share in the case of the Series G,
Series H, Series I, Series J, Series K and Series L), plus any accrued and
unpaid dividends.

Equity Stock
------------
The Company is authorized to issue 200,000,000 shares of Equity
Stock. The Articles of Incorporation provide that the Equity Stock may be
issued from time to time in one or more series and give the Board of
Directors broad authority to fix the dividend and distribution rights,
conversion and voting rights, redemption provisions and liquidation rights
of each series of Equity Stock.

In June 1997, the Company contributed $22,500,000 (225,000 shares)
of its Equity Stock, Series A ("Equity Stock") to a partnership in which
the Company is the general partner. As a result of this contribution, the
Company obtained a controlling interest in the Partnership and began to
consolidate the accounts of the Partnership and therefore the equity stock
is eliminated in consolidation. The Equity Stock ranks on a parity with
Common Stock and junior to the Company's Cumulative Senior Preferred Stock
with respect to general preference rights and has a liquidation amount of
ten times the amount paid to each Common Share up to a maximum of $100 per
share. Quarterly distributions per share on the Equity Stock are equal to
the lesser of (i) 10 times the amount paid per Common Stock or (ii) $2.20.

Common Stock
------------
During the six months ended June 30, 1999, the Company issued
13,009,485 shares of common stock in connection with the merger with
Storage Trust, 568,761 shares of common stock in connection with the
acquisition of minority interests, 399,155 shares of common stock in
connection with the exercise of stock options, and 54,605 shares of common
stock in connection with the conversion of OP units.

In June 1998, the Company's Board of Directors authorized the
repurchase from time to time of up to 10,000,000 shares of the Company's
common stock on the open market or in privately negotiated transactions.
During the six months ended June 30, 1999, the Company repurchased a total
of 690,227 shares, for a total aggregate cost of approximately $17.6
million. Through June 30, 1999, the Company has repurchased a total of
3,509,627 shares of common stock (of the 10,000,000 shares authorized) at
an aggregate cost of approximately $89.9 million. From July 1, 1999 through
August 9, 1999, the Company repurchased an additional 945,400 shares of
common stock at an aggregate cost of approximately $24.0 million.

Class B Common Stock
--------------------
The Class B Common Stock will (i) not participate in distributions
until the later to occur of funds from operations ("FFO") per Common Share
as defined below, aggregating $1.80 during any period of four consecutive
calendar quarters, or January 1, 2000. Thereafter, the Class B Common Stock
will participate in distributions, other than liquidating distributions, at
the rate of 97% of the per share distributions on the Common Stock,
provided that cumulative distributions of at least $0.22 per quarter per
share have been paid on the Common Stock, (ii) not participate in
liquidating distributions, (iii) not be entitled to vote (except as
expressly required by California law) and (iv) automatically convert into
Common Stock, on a share for share basis, upon the later to occur of FFO
per Common Share aggregating $3.00 during any period of four consecutive
calendar quarters or January 1, 2003.

For these purposes, FFO means net income (loss) before (i) gain
(loss) on early extinguishment of debt, (ii) minority interest in income
and (iii) gain (loss) on disposition of real estate, adjusted as follows:
(i) plus depreciation and amortization, and (ii) less FFO attributable to
minority interest. FFO per Common Share means FFO less preferred stock
dividends (other than dividends on convertible preferred stock) divided by
the outstanding weighted average shares of Common Stock assuming conversion
of all outstanding convertible securities and the Class B Common Stock.

For these purposes, FFO per share of Common Stock (as defined) was
$2.34 for the four consecutive calendar quarters ended June 30, 1999.

Dividends
---------
The following summarizes dividends paid during the first six
months of 1999:

Distributions Per Share
or Depositary Share Total Distributions
----------------------- -------------------
Series A........................ $1.250 $ 2,281,000
Series B........................ $1.150 2,744,000
Series C........................ $0.844 1,012,000
Series D........................ $1.188 1,426,000
Series E........................ $1.250 2,744,000
Series F........................ $1.219 2,802,000
Series G........................ $1.109 7,656,000
Series H........................ $1.056 7,130,000
Series I........................ $1.078 4,312,000
Series J........................ $1.000 6,000,000
Series K ....................... $0.934 4,296,000
Series L ....................... $0.642 2,951,000
-------------------
45,354,000
Common.......................... $0.440 56,767,000
-------------------
Total dividends paid......... $ 102,121,000
===================

The dividends paid with respect to the Series K and Series L,
represent a partial period from the date of issuance though June 30, 1999.

The dividend rate on the Series C Preferred Stock for the first
and second quarters of 1999 was equal to 6.75% per annum. The dividend rate
per annum will be adjusted quarterly and will be equal to the highest of
one of three U.S. Treasury indices (Treasury Bill Rate, Ten Year Constant
Maturity Rate, or Thirty Year Constant Maturity Rate) multiplied by 110%.
However, the dividend rate for any dividend period will neither be less

than 6.75% per annum nor greater than 10.75%. The dividend rate for the
quarter ending September 30, 1999 will be equal to 6.75% per annum.

10. Segment Information
-------------------

In July 1997, the FASB issued Statement of Financial Accounting
Standards No. 131, "Disclosures about Segments of an Enterprise and Related
Information" ("FAS 131"), which establishes standards for the way that
public business enterprises report information about operating segments.
This statement is effective for financial statements for periods beginning
after December 15, 1997. The Company has adopted this standard effective
for the year ended December 31, 1998. For information regarding the
description of each reportable segment, policies relating to the
measurement of segment profit or loss, and a discussion of segment assets,
refer to the consolidated financial statements and footnotes thereto
included in the Company's annual report on Form 10-K for the year ended
December 31, 1998.

The Company's income statement provides most of the information
required in order to determine the performance of each of the Company's
three segments. The following tables reconcile the performance of each
segment, in terms of segment revenues and segment income, to the
consolidated revenues and net income of the Company. It further provides
detail of the segment components of the income statement item, "Equity in
earnings of real estate entities."

Six months ended June 30,
---------------------------
1999 1998 Change
----------- ----------- -----------
(Dollar amounts in thousands)
RECONCILIATION OF REVENUES BY SEGMENT:
- --------------------------------------

Self storage
- ------------

Self-storage property rentals............................ $278,774 $231,565 $47,209
Facility management...................................... 2,823 3,319 (496)
Equity in earnings - self storage property operations.... 11,119 10,848 271
----------- ----------- -----------
Self storage segment revenues........................ 292,716 245,732 46,984
----------- ----------- -----------

Portable self storage ..................................... 11,876 11,289 587
- ---------------------- ----------- ----------- -----------

Commercial properties
- ----------------------
Commercial property rentals.............................. 3,862 19,396 (15,534)
Facility management...................................... - 98 (98)
Equity in earnings - commercial property operations...... 17,300 7,444 9,856
----------- ----------- -----------
Commercial properties segment revenues.............. 21,162 26,938 (5,776)
----------- ----------- -----------

Other items not allocated to segments:
- --------------------------------------
Equity in earnings - Depreciation (self storage) ........ (3,967) (4,244) 277
Equity in earnings - Depreciation (commercial properties) (5,607) (2,395) (3,212)
Equity in earnings - general and administrative and other (1,376) (1,717) 341
Interest and other income................................ 5,920 8,004 (2,084)
----------- ----------- -----------
Total other items not allocated to segments.......... (5,030) (352) (4,678)
----------- ----------- -----------

Total revenues....................................... $320,724 $283,607 $37,117
=========== =========== ===========

Six months ended June 30,
---------------------------
1999 1998 Change
----------- ----------- -----------
(Dollar amounts in thousands)
RECONCILIATION OF NET INCOME BY SEGMENT:
- ----------------------------------------

Self storage
- ------------

Self-storage properties ................................. $192,543 $160,727 $31,816
Facility management...................................... 2,351 2,777 (426)
Equity in earnings - self storage property operations.... 11,119 10,848 271
----------- ----------- -----------
Total self storage segment net income................ 206,013 174,352 31,661
----------- ----------- -----------

Portable self storage...................................... (6,871) (18,224) 11,353
- --------------------- ----------- ----------- -----------

Commercial properties
Commercial properties.................................... 2,593 12,894 (10,301)
Facility management...................................... - 86 (86)
Equity in earnings - commercial property operations...... 17,300 7,444 9,856
----------- ----------- -----------
Total commercial property segment net income......... 19,893 20,424 (531)
----------- ----------- -----------

Other items not allocated to segments:
- --------------------------------------
Equity in earnings - depreciation (self-storage) ........ (3,967) (4,244) 277
Equity in earnings - depreciation (commercial properties) (5,607) (2,395) (3,212)
Equity in earnings - general and administrative and other (1,376) (1,717) 341
Depreciation - self storage.............................. (61,639) (49,233) (12,406)
Depreciation - commercial properties..................... (854) (4,178) 3,324
Interest and other income................................ 5,920 8,004 (2,084)
General and administrative............................... (4,628) (4,562) (66)
Interest expense......................................... (3,734) (2,095) (1,639)
Minority interest in income.............................. (7,657) (10,569) 2,912
----------- ----------- -----------
Total other items not allocated to segments.......... (83,542) (70,989) (12,553)
----------- ----------- -----------

Total net income .................................... $135,493 $105,563 $29,930
=========== =========== ===========

See accompanying notes.
17

ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
- --------------------------------------------------------------------------------
OF OPERATIONS
- -------------

The following discussion and analysis should be read in conjunction
with the Company's consolidated financial statements and notes thereto.

FORWARD LOOKING STATEMENTS: When used within this document, the words
"expects," "believes," "anticipates," "should," "estimates," and similar
expressions are intended to identify "forward-looking statements" within the
meaning of that term in Section 27A of the Securities Exchange Act of 1933, as
amended, and in Section 21F of the Securities Exchange Act of 1934, as amended.
Such forward-looking statements involve known and unknown risks, uncertainties,
and other factors, which may cause the actual results and performance of the
Company to be materially different from those expressed or implied in the
forward looking statements. Such factors include the impact of competition from
new and existing self-storage and commercial facilities which could impact rents
and occupancy levels at the Company's facilities; the Company's ability to
evaluate, finance, and integrate acquired and developed properties into the
Company's existing operations; the Company's ability to effectively compete in
the markets that it does business in; the impact of the regulatory environment
as well as national, state, and local laws and regulations including, without
limitation, those governing Real Estate Investment Trusts; the acceptance by
consumers of the Pickup and Delivery concept; the impact of general economic
conditions upon rental rates and occupancy levels at the Company's facilities;
and the availability of permanent capital at attractive rates.

RESULTS OF OPERATIONS
- --------------------------------------------------------------------------------

Net income for the three months ended June 30, 1999 was $73,651,000
compared to $57,199,000 for the same period in 1998, representing an increase of
$16,452,000 or 28.8%. Net income for the six months ended June 30, 1999 was
$135,493,000 compared to $105,563,000 for the same period in 1998, representing
an increase of $29,930,000 or 28.4%. The increase in net income was primarily
the result of improved property operations, the acquisition of additional real
estate investments during 1998 and 1999, and reduced operating losses from the
Pickup and Delivery portable self-storage business.

Net income allocable to the common shareholders was $49,827,000 ($0.39
per common share, based on 129,250,000 weighted average diluted shares) for the
three months ended June 30, 1999 compared to $37,070,000 ($0.32 per common
share, based on 114,430,000 weighted average diluted shares) for the same period
in 1998. In computing net income per common share, dividends to the Company's
preferred shareholders ($23,824,000 and $20,129,000, respectively for the three
months ended June 30, 1999 and 1998, respectively) have been deducted from net
income in determining net income allocable to the Company's common shareholders.

Net income allocable to the common shareholders was $90,139,000 ($0.73
per common, based on 124,133,000 weighted average diluted shares) for the six
months ended June 30, 1999 compared to $65,294,000 ($0.58 per common shares,
based on 112,246,000 weighted average diluted shares) for the same period in
1998. In computing net income per common share, dividends to the Company's
preferred shareholders ($45,354,000 and $40,269,000 for the six months ended
June 30, 1999 and 1998, respectively) have been deducted from net income in
determining net income allocable to the Company's common shareholders.

Operating losses generated from the Company's portable self-storage
business have negatively impacted net income allocable to the common
shareholders. Operating losses from the Company's portable self storage business
were $2,935,000 or approximately $0.02 per common share on a diluted basis for
the three months ended June 30, 1999 and $8,342,000 or approximately $0.07 per
common share on a diluted basis, for the same period in 1998. Operating losses
from the Company's portable self storage business were $6,871,000 or
approximately $0.06 per common share on a diluted basis for the six months ended
June 30, 1999 and $18,224,000, or approximately $0.16 per common share on a
diluted basis, for the same period in 1998.

REAL ESTATE OPERATIONS
- --------------------------------------------------------------------------------

Rental income and cost of operations have increased for the three and
six months ended June 30, 1999 compared to the same periods in 1998 due to the
Company's merger and acquisition activities throughout 1998 and 1999, most
notably the merger with Storage Trust. This was offset partially by the
deconsolidation of PSBP whereby the accounts of PSBP, effective April 1, 1998,
were no longer consolidated with the Company's and the Company began to account
for its investment in PSBP using the equity method. As a result of these items,
the number of self-storage facilities included in the Company's consolidated
financial statements has increased from 918 at June 30, 1998 to 1,191 at June
30, 1999.

SELF-STORAGE OPERATIONS: The following table summarizes the operating
results (before depreciation) of (i) the 886 self-storage facilities that the
Company has owned and operated on a stabilized basis throughout the period from
January 1, 1998 to June 30, 1999 (the "Consistent Group"), and (ii) all other
facilities (the "Other Facilities"):

SUMMARY OF SELF-STORAGE OPERATIONS - HISTORICAL
- -----------------------------------------------

Three months ended Six months ended
June 30, June 30,
----------------------- -----------------------
1999 1998 Change 1999 1998 Change
---------- ---------- -------- ---------- ---------- --------
(Amounts in thousands, except per square foot data)

Rental income
- -------------
Consistent Group............. $120,401 $116,498 3.4% $237,608 $227,144 4.6%
Other Facilities............. 29,344 3,389 765.9% 41,166 4,421 831.1%
---------- ---------- -------- ---------- ---------- --------
149,745 119,887 24.9% 278,774 231,565 20.4%
---------- ---------- -------- ---------- ---------- --------
Cost of Operations
- ------------------
Consistent Group............. 35,234 34,868 1.0% 71,944 69,405 3.7%
Other Facilities............. 10,368 1,024 912.5% 14,287 1,433 897.0%
---------- ---------- -------- ---------- ---------- --------
45,602 35,892 27.1% 86,231 70,838 21.7%
---------- ---------- -------- ---------- ---------- --------
Net operating income
- --------------------
Consistent Group............. 85,167 81,630 4.3% 165,664 157,739 5.0%
Other Facilities............. 18,976 2,365 702.4% 26,879 2,988 799.6%
---------- ---------- -------- ---------- ---------- --------
$104,143 $83,995 24.0% $192,543 $160,727 19.8%
========== ========== ======== ========== ========== ========

Net rentable square feet (at the
end of the period, in 000's). 70,406 55,028 27.9% 70,406 55,028 27.9%

Number of facilities (at the end
of the period)............... 1,191 918 29.7% 1,191 918 29.7%

CONSISTENT GROUP DATA:

Weighted average annualized
realized rent per occupied
square foot.................. $9.91 $9.61 3.0% $9.88 $9.45 4.6%
Weighted average annualized
scheduled rent per square $10.25 $10.07 1.8% $10.22 $9.94 2.8%
foot.........................
Weighted average occupancy for
the period................... 92.7% 92.5% 0.2% 91.8% 91.8% 0.0%

Rental income for the Consistent Group facilities for three and six
months ended June 30, 1999, respectively, is net of promotional discounts
totaling $3.7 million and $3.9 million, respectively, compared to $7.5 million
and $7.8 million for the same periods in 1998. In addition, included in cost of
operations for the Consistent Group facilities for the three and six months
ended June 30, 1999, respectively, are costs associated with the telephone
reservation center and advertising totaling $3.6 million and $7.2 million,
respectively, compared to $2.7 million and $5.5 million, respectively, for the
same periods in 1998.

COMMERCIAL PROPERTY OPERATIONS:. The following table sets forth the
commercial property operations included in the Company's financial statements:

COMMERCIAL PROPERTY OPERATIONS - HISTORICAL
-------------------------------------------

Three months ended June 30, Six months ended June 30,
--------------------------- ---------------------------
1999 1998 Change 1999 1998 Change
------------ ------------ ------------ ------------ ------------ ------------
(Amounts in thousands)

Rental income............. $ 1,948 $ 1,715 13.6% $ 3,862 $ 19,396 (80.1)%
Cost of operations........ 631 654 (3.5)% 1,269 6,502 (80.5)%
------------ ------------ ------------ ------------ ------------ ------------
Net operating income...... $ 1,317 $ 1,061 24.1% $ 2,593 $ 12,894 (79.9)%
============ ============ ============ ============ ============ ============

During the second quarter of 1998, the Company ceased to have a
controlling interest in PSBP. As a result, effective April 1, 1998, the Company
no longer includes the accounts of PSBP in its consolidated financial statements
and began accounting for its investment in PSBP using the equity method (see
"Equity in earnings of real estate entities"). The income statement for the six
months ended June 30, 1998 includes the consolidated operating results of PSBP
for the three months ended March 31, 1998. The significant decrease in rental
income and cost of operations for the six months ended June 30, 1999 reflects
the Company's deconsolidation of PSBP.

EQUITY IN EARNINGS OF REAL ESTATE ENTITIES: In addition to its
ownership of 12,621,428 common shares and operating partnership units in PSBP,
the Company had general and limited partnership interests in 15 limited
partnerships at June 30, 1999. (PSBP and the limited partnerships are
collectively referred to as the "Unconsolidated Entities"). Due to the Company's
limited ownership interest and control of these entities, the Company does not
consolidate the accounts of these entities for financial reporting purposes, and
accounts for such investments using the equity method.

Equity in earnings of real estate entities for the six months ended
June 30, 1999 consists of the Company's pro rata share of the Unconsolidated
Entities based upon the Company's ownership interest for the period. In the
aggregate, the Unconsolidated Entities own a total of 235 real estate
facilities, 115 of which are self-storage facilities. The following table sets
forth the significant components of the Company's equity in earnings of real
estate entities:

HISTORICAL SUMMARY:
-------------------

( Amounts in thousands)

Property operations:
PSBP..................... $8,878 $7,444 $1,434 $17,300 $7,444 $9,856
Development Joint Venture 569 119 450 915 180 735
Other partnerships....... 6,283 5,829 454 10,204 10,668 (464)
------------ ------------ ------------ ------------ ------------ ------------
15,730 13,392 2,338 28,419 18,292 10,127
------------ ------------ ------------ ------------ ------------ ------------

Depreciation:
PSBP..................... (2,940) (2,395) (545) (5,607) (2,395) (3,212)
Development Joint Venture (304) (111) (193) (565) (191) (374)
Other partnerships....... (2,201) (2,267) 66 (3,402) (4,053) 651
------------ ------------ ------------ ------------ ------------ ------------
(5,445) (4,773) (672) (9,574) (6,639) (2,935)
------------ ------------ ------------ ------------ ------------ ------------

Other: (1)
PSBP..................... (1,057) (501) (556) (1,883) (501) (1,382)
Development Joint Venture 21 27 (6) 43 58 (15)
Other partnerships....... 98 (828) 926 464 (1,274) 1,738
------------ ------------ ------------ ------------ ------------ ------------
(938) (1,302) 364 (1,376) (1,717) 341
------------ ------------ ------------ ------------ ------------ ------------

Total equity in earnings of
real estate entities....... $9,347 $7,317 $2,030 $17,469 $9,936 $7,533
============ ============ ============ ============ ============ ============

(1) "Other" reflects the Company's share of general and administrative
expense, interest expense, interest income, and other
non-property, non-depreciation related operating results of these
entities. For PSBP, it also includes the Company's share of
preferred dividends paid by PSBP.

The increase in 1999 earnings compared to 1998 is principally the
result of the deconsolidation of PSBP whereby the accounts of PSBP, effective
April 1, 1998, were no longer consolidated with the Company's and the Company
began to account for its investment in PSBP using the equity method.

PORTABLE SELF-STORAGE OPERATIONS: At June 30, 1999, PSPUD operated 36
facilities in 11 states. Due to the start-up nature of the business, PSPUD
incurred operating losses totaling approximately $2,935,000 and $6,871,000 for
the three and six months ended June 30, 1999, as compared to $8,342,000 and
$18,224,000 for the same periods in 1998:

PORTABLE SELF-STORAGE:
----------------------

Rental and other income ..... $ 6,448 $ 6,118 $ 330 $ 11,876 $ 11,289 $ 587
------------ ------------ ------------ ------------ ------------ ------------
Cost of operations:
Direct operating costs... 7,383 8,757 (1,374) 14,796 18,238 (3,442)
Marketing and advertising 307 3,777 (3,470) 729 7,335 (6,606)
Depreciation............. 1,250 1,138 112 2,432 2,029 403
General and administrative 443 788 (345) 790 1,911 (1,121)
------------ ------------ ------------ ------------ ------------ ------------
Total cost of
operations............ 9,383 14,460 (5,077) 18,747 29,513 (10,766)
------------ ------------ ------------ ------------ ------------ ------------
Operating losses............. $ (2,935) $ (8,342) $ 5,407 $ (6,871) $(18,224) $ 11,353
============ ============ ============ ============ ============ ============

Included in direct operating costs above are $2.8 million and $5.7
million, respectively, with respect to facility leases for the three and six
months ended June 30, 1999, as compared to $3.4 million and $6.6 million,
respectively, for the same periods in 1998.

Until the PSPUD facilities are operating profitably, PSPUD's operations
are expected to continue to adversely impact the Company's earnings and cash
flow. PSPUD believes that its business is likely to be more successful in
certain markets than in others. There can be no assurances as to the level of
PSPUD's expansion, level of gross rentals, level of move-outs or profitability.

PROPERTY MANAGEMENT OPERATIONS
- --------------------------------------------------------------------------------

At June 30, 1999, the Company managed 150 self-storage facilities (115
owned by Unconsolidated Entities and 35 owned by third parties) pursuant to
property management contracts. The property management contracts generally
provide for compensation equal to 6% of gross revenues of the facilities
managed.

PROPERTY MANAGEMENT OPERATIONS:
-------------------------------

Facility management fees:
Self-storage............. $1,409 $1,652 $(243) $2,823 $3,319 $(496)
Commercial properties.... - - - - 98 (98)
------------ ------------ ------------ ------------ ------------ ------------
1,409 1,652 (243) 2,823 3,417 (594)
------------ ------------ ------------ ------------ ------------ ------------

Cost of operations:
Self-storage............. 217 268 (51) 472 542 (70)
Commercial properties.... - - - - 12 (12)
------------ ------------ ------------ ------------ ------------ ------------
217 268 (51) 472 554 (82)
------------ ------------ ------------ ------------ ------------ ------------

Net operating income:
Self-storage............. 1,192 1,384 (192) 2,351 2,777 (426)
Commercial properties.... - - - - 86 (86)
------------ ------------ ------------ ------------ ------------ ------------
$1,192 $1,384 $(192) $2,351 $2,863 $(512)
============ ============ ============ ============ ============ ============

Since June 30, 1998, the Company completed several acquisitions of
self-storage facilities from affiliated entities and, as a result, self-storage
properties which were managed by the Company became owned facilities and the
related management fee income with respect to these facilities ceased. Since the
Company has acquired in the past, and may continue to seek to acquire in the
future, self-storage facilities owned by Unconsolidated Entities, the company's
facility management income and related cost of operations should continue to
decrease.

The decrease in property management operations with respect to
commercial properties for 1999 as compared to 1998 is due to the deconsolidation
of PSBP, which eliminated commercial properties management fee income and cost
of operations after April 1, 1998.

OTHER INCOME AND EXPENSE ITEMS
- --------------------------------------------------------------------------------

INTEREST AND OTHER INCOME: The Company operates additional businesses
through affiliates, including retail sales of locks, boxes, and packing supplies
as well as the rental of trucks. The net results of these two businesses are
presented along with interest and other income, as "interest and other income."
The components of interest and other income are detailed as follows:

INTEREST AND OTHER INCOME:
--------------------------

Revenues................. $3,484 $2,189 $1,295 $5,619 $3,671 $1,948
Cost of operations....... (2,387) (1,842) (545) (4,197) (3,133) (1,064)
------------ ------------ ------------ ------------ ------------ ------------
Net operating income... 1,097 347 750 1,422 538 884
Interest and other income... 2,460 4,005 (1,545) 4,498 7,466 (2,968)
------------ ------------ ------------ ------------ ------------ ------------
Total interest and other
income.................... $3,557 $4,352 $(795) $5,920 $8,004 $(2,084)
============ ============ ============ ============ ============ ============

Interest and other income principally consists of interest earned on
cash balances and interest related to mortgage notes receivable. The decrease in
interest income for the six months ended June 30, 1999 compared to the same
periods in 1998 is primarily due to decreased interest income on excess cash
balances.

DEPRECIATION AND AMORTIZATION: Depreciation and amortization expense
has increased $8,327,000 to $33,519,000 for the three months ended June 30, 1999
as compared to $25,192,000 for the same period in 1998. Depreciation and
amortization expense has increased $9,082,000 to $62,493,000 for the six months
ended June 30, 1999 as compared to $53,411,000 for the same period in 1998.
These increases are principally due to the acquisition of additional real estate
facilities during 1998 and 1999, offset partially by the deconsolidation of
PSBP. Amortization expense with respect to intangible assets totaled $2,328,000
and $4,656,000 for the three and six months, respectively, ended June 30, 1999
and 1998.

MINORITY INTEREST IN INCOME: Minority interest in income represents the
income allocable to equity interests in the Consolidated Entities, which are not
owned by the Company. Minority interest in income was $4,304,000 and $7,657,000,
respectively, for the three and six months ended June 30, 1999, as compared to
$4,217,000 and $10,569,000, respectively, for the same periods in 1998.

The decrease in minority interest in income is primarily the result of
the deconsolidation of PSBP, whereby the minority interest with respect to PSBP
after June 30, 1998 was removed from the Company's consolidated financial
statements.

SUPPLEMENTAL PROPERTY DATA AND TRENDS
- --------------------------------------------------------------------------------

At June 30, 1999, there were approximately 48 ownership entities owning
in aggregate 1,306 self-storage facilities, including the facilities which the
Company owns and/or operates. At June 30, 1999, 115 of these facilities were
owned by the Unconsolidated Entities, in which the Company has an ownership
interest and uses the equity method of accounting. The remaining 1,191
facilities are owned by the Company and Consolidated Entities, many of which
were acquired through business combinations, including the merger with Storage
Trust, during 1999 and 1998. The following table summarizes the Company's
investment in real estate facilities as of June 30, 1999, excluding the seven
real estate facilities used in PSPUD's operations:

Number of Facilities in which the Net Rentable Square Footage
Company has an ownership interest (in thousands)
----------------------------------- -----------------------------------
Self-Storage Commercial Self-Storage Commercial
Facilities Properties Total Facilities Properties Total
------------ ---------- --------- ------------ ---------- ---------

Wholly-owned facilities.................... 629 1 630 38,469 9 38,478
Facilities owned by Consolidated Entities.. 562 - 562 31,937 - 31,937
------------ ---------- --------- ------------ ---------- ---------
Total consolidated facilities.......... 1,191 1 1,192 70,406 9 70,415
Facilities owned by Unconsolidated Entities 115 120 235 6,749 11,640 18,389
------------ ---------- --------- ------------ ---------- ---------
Total facilities in which the Company
has an ownership interest............ 1,306 121 1,427 77,155 11,649 88,804
============ ========== ========= ============ ========== =========

In order to evaluate how the Company's overall portfolio has performed,
management analyzes the operating performance of a consistent group of
self-storage facilities representing 979 (57.3 million net rentable square feet)
of the 1,306 self-storage facilities (herein referred to as "Same Store"
self-storage facilities). The 979 facilities represent a pool of properties,
which have been operated under the "Public Storage" name, at a stabilized level,
by the Company since January 1, 1994. From time to time, the Company removes
facilities from the Same Store pool as a result of expansions or dispositions of
the properties, primarily from condemnations by governmental authorities, which
make such facilities' results not comparable to previous periods. The Same Store
group of properties includes 893 consolidated facilities and 86 facilities owned
by Unconsolidated Entities. The following table summarizes the pre-depreciation
historical operating results of the Same Store self-storage facilities:

SAME STORE MINI-WAREHOUSE FACILITIES (979 FACILITIES):
------------------------------------------------------
(historical property operations)

Three months ended June 30, Six months ended June 30,
------------------------------------------ ------------------------------------------
1999 1998 Change 1999 1998 Change
------------ ------------ ------------ ------------ ------------ ------------
(Amounts in thousands)

Rental income............... $135,135 $130,260 3.7% $266,347 $253,952 4.9%
Cost of operations (includes
an imputed 6% property
management fee) (1)....... 45,725 45,188 1.2% 92,958 89,828 3.5%
------------ ------------ ------------ ------------ ------------ ------------
Net operating income........ $89,410 $85,072 5.1% $173,389 $164,124 5.6%
============ ============ ============ ============ ============ ============

Gross profit margin (2)..... 66.2% 65.3% 0.9% 65.1% 64.6% 0.5%

Weighted Average:
Occupancy during the
period................. 93.1% 92.9% 0.2% 92.2% 92.2% 0.0%

Annualized realized rent
per sq. ft. for
period.(3)............. $10.13 $9.80 3.4% $10.08 $9.62 4.8%

Annualized scheduled rent
per sq. ft. for period
(3).................... $10.50 $10.28 2.1% $10.48 $10.14 3.4%

1. Assumes payment of property management fees on all facilities, including
those facilities owned by the Company for which effective November 16,
1995 no fee is paid.

2. Gross profit margin is computed by dividing property net operating income
(which excludes depreciation expense) by rental revenues. Cost of
operations includes a 6% management fee. The gross profit margin
excluding the property management fee was 72.2% and 71.3% for the three
months ended June 30, 1999 and 1998, respectively; and 71.1% and 70.6%
for the six months ended June 30, 1999 and 1998, respectively.

3. Realized rent per square foot represents the actual revenue earned per
occupied square foot during the period - annualized. Management believes
this is a more relevant measure than the scheduled rental rates, since
scheduled rates can be discounted through the use of promotions.

Rental income for the Same Store facilities included promotional
discounts totaling $3,923,000 and $8,049,000, respectively, for the three and
six months ended June 30, 1999, respectively as compared to $4,136,000 and
$8,358,000 for the same periods in 1998.

During the year ended December 31, 1998 as compared to the year ended
December 31, 1997, the Same Store facilities exhibited growth in rental income
and net operating income of 7.6% and 8.2%, respectively, as a result of
increased realized rents and occupancies. The growth in rental income and net
operating income has decreased in the first six months of 1999 to 4.9% and 5.6%,
respectively, as compared to the first six months of 1998 which was 7.7% and
8.8%, respectively, due to flat occupancies and smaller increases in realized
rents than was experienced in 1998. The Company expects the level of growth to
continue at levels less than that experienced in 1998, as it expects no
significant increases in occupancies and expects continued moderated increases
in realized rents.

LIQUIDITY AND CAPITAL RESOURCES
- --------------------------------------------------------------------------------

The Company believes that its internally generated net cash provided by
operating activities will continue to be sufficient to enable it to meet its
operating expenses, capital improvements, debt service requirements and
distributions to shareholders for the foreseeable future.

Operating as a real estate investment trust ("REIT"), the Company's
ability to retain cash flow for reinvestment is restricted. In order for the
Company to maintain its REIT status, a substantial portion of its operating cash
flow must be used to make distributions to its shareholders (see "REIT STATUS"
below). However, despite the significant distribution requirements, the Company
has been able to retain a significant amount of its operating cash flow. The
following table summarizes the Company's ability to pay the minority interests'
distributions, its dividends to the preferred shareholders and capital
improvements to maintain the facilities through the use of cash provided by
operating activities. The remaining cash flow generated is available to the
Company to make both scheduled and optional principal payments on debt and for
reinvestment.

For the six months ended
June 30,
--------------------------
1999 1998
----------- -----------
(Amounts in thousands)

Net income......................................................... $135,493 $105,563
Depreciation and amortization...................................... 62,493 53,411
Depreciation from Unconsolidated Entities.......................... 9,574 6,639
Minority interest in income........................................ 7,657 10,569
----------- -----------
Net cash provided by operating activities........................ 215,217 176,182

Distributions from operations to minority interests................ (12,472) (17,596)
----------- -----------
Cash from operations allocable to the Company's shareholders....... 202,745 158,586

Less: preferred stock dividends.................................... (45,354) (40,269)
----------- -----------
Cash from operations available to common shareholders.............. 157,391 118,317

Capital improvements to maintain facilities:....................... (10,156) (10,336)
Add back: minority interest share of capital improvements
to maintain facilities........................................... 518 915
----------- -----------
Funds available for principal payments on debt, common
dividends and reinvestment....................................... 147,753 108,896

Cash distributions to common shareholders.......................... (56,767) (49,806)
----------- -----------
Funds available for principal payments on debt and reinvestment.... $90,986 $59,090
=========== ===========

The Company expects to fund its growth strategies with cash on hand at
June 30, 1999, internally generated retained cash flows, proceeds from issuing
equity securities and borrowings under its $150 million credit facility. The
Company intends to repay amounts borrowed under the credit facility from
undistributed operating cash flow or, as market conditions permit and are
determined to be advantageous, from the public or private placement of equity
securities.

The Company's portfolio of real estate facilities remains substantially
unencumbered. At June 30, 1999, the Company had debt outstanding of $172.6
million, of which $30.6 million is mortgage debt and $142 million is unsecured
senior notes, and had consolidated real estate facilities with a book value of
$3.4 billion. The Company has been reluctant to finance its acquisitions with
debt and generally will only increase its mortgage borrowing through the
assumption of pre-existing debt on acquired real estate facilities.

During the first quarter of 1999, the Company issued a total of 9.2
million depositary shares (each representing 1/1,000 of a share) of its
Preferred Stock, Series K and L, raising net proceeds of approximately $222.6
million. Proceeds of the offerings were utilized to pay costs in connection with
the Storage Trust merger. The remaining proceeds will be utilized to fund the
Company's development activities, PSPUD activities and acquisition activities.

DISTRIBUTION REQUIREMENTS: The Company's conservative distribution
policy has been the principal reason for the Company's ability to retain
significant operating cash flows which have been used to make additional
investments and reduce debt. During the six months ended June 30, 1999 and 1998,
the Company distributed to common shareholders approximately 36.1% and 42.1% of
its cash available from operations allocable to common shareholders,
respectively.

During the six months ended June 30, 1999, the Company paid dividends
totaling $45,354,000 to the holders of the Company's Senior Preferred Stock and
$56,767,000 to the holders of Common Stock. The Company estimates the regular
distribution requirements for fiscal 1999 with respect to Senior Preferred Stock
outstanding at June 30, 1999 to be approximately $95.2 million. Distributions
with respect to the common stock will be determined based upon the Company's
REIT distribution requirements after taking into consideration distributions to
the Company's preferred shareholders.

The Company expects to make a special distribution to common
shareholders in 1999 assuming a continuation of its increasing level of taxable
income.

CAPITAL IMPROVEMENT REQUIREMENTS: During 1999, the Company budgeted
approximately $20.1 million for capital improvements in respect of its
consolidated properties ($19.5 million for its self-storage facilities and $0.6
million for its commercial space), excluding amounts to be incurred with respect
to the facilities acquired in the Storage Trust merger. The minority interests'
share of the budgeted capital improvements is approximately $1.5 million. During
the six months ended June 30, 1999, the Company incurred capital improvements of
approximately $10.2 million. In addition, the Company expects to spend over the
next 18 months approximately $15 million in property improvements to the
properties acquired in the Storage Trust merger.

DEBT SERVICE REQUIREMENTS: The Company does not believe it has any
significant refinancing risks with respect to its notes payable, all of which is
fixed rate. At June 30, 1999, the Company had total outstanding notes payable of
approximately $172,551,000 (including $100,000,000 assumed in connection with
the March 1999 merger with Storage Trust). Approximate principal maturities of
notes payable at June 30, 1999 are as follows:

Unsecured Fixed Rate
Senior Notes Mortgage Debt Total
-------------- -------------- --------------
(Amounts in thousands)

1999 (remainder of)...... $ 4,000 $ 1,523 $ 5,523
2000..................... 8,750 2,622 11,372
2001..................... 9,500 2,910 12,410
2002..................... 24,450 3,229 27,679
2003..................... 35,900 3,584 39,484
Thereafter............... 59,400 16,683 76,083
-------------- -------------- --------------
$ 142,000 $ 30,551 $ 172,551
============== ============== ==============
Weighted Average Rate 7.4% 10.3% 7.9%
============== ============== ==============

REPURCHASES OF THE COMPANY'S COMMON STOCK: As previously announced, the
Company's Board of Directors authorized the repurchase from time to time of up
to 10,000,000 shares of the Company's common stock on the open market or in
privately negotiated transactions. In the six months ended June 30, 1999, the
Company repurchased a total of 690,227 shares, for a total aggregate cost of
approximately $17.6 million. Cumulatively since the repurchase announcement,
through June 30, 1999, the Company has repurchased a total of 3,509,627 shares
of common stock at an aggregate cost of approximately $89.9 million. From July
1, 1999 through August 9, 1999, the Company repurchased an additional 945,400
shares of common stock at an aggregate cost of approximately $24.0 million.

DEVELOPMENT ACTIVITIES: As previously announced, in April 1997, the
Company and an institutional investor formed a joint venture partnership for the
purpose of developing up to $220 million of self-storage facilities. The joint
venture is funded solely with equity capital consisting of 30% from the Company
and 70% from the institutional investor. The Company's share of the cost of the
real estate in the joint venture is approximately $57.3 million at June 30,
1999.

During the six months ended June 30, 1999, the joint venture opened
five new self storage facilities that it had developed (approximately 317,000
net rentable sq. ft.). In addition, one project that was completed by the
Company in 1998 was contributed to the joint venture in the quarter ended March
31, 1999. As of June 30, 1999, the joint venture had 30 operating facilities,
with 1,822,000 net rentable square feet and total development costs of
approximately $151.0 million. As of June 30, 1999, the joint venture is
developing 13 additional projects (approximately 865,000 net rentable square
feet) that were in process, with total costs incurred of $40.1 million and
estimated remaining costs to complete of $17.9 million.

At June 30, 1999, the Joint Venture is reviewing an additional six
projects ($20.7 million incurred at June 30, 1999, with remaining costs to
complete of $5.8 million). One of these projects has been approved subsequent to
June 30, 1999 (through August 9, 1999), and upon approval of the remaining five
facilities, the Joint Venture will be fully committed. These six projects
include one completed facility and five facilities under construction. At June
30, 1999, approximately $16.4 million is included in construction in process and
approximately $4.3 million is included in real estate facilities with respect to
these six projects. As the projects are approved, the construction costs will be
transferred to the Joint Venture.

The Company has plans to develop a total of 36 additional self storage
facilities, with total estimated costs of construction of approximately $165
million, with completions over approximately the next 18 to 24 months. This
development is in addition to the six properties that are being reviewed by the
joint venture and the 13 facilities that the Joint Venture is currently
developing. At June 30, 1999, 19 of these facilities are in process, with
approximately $36 million incurred and $50 million of costs to complete, and 17
represent identified sites which have not yet begun construction (with total
estimated costs of approximately $79 million). All of these projects are subject
to significant contingencies

The Company intends to fund this construction either through a second
development joint venture or alone through a combination of retained cash flow,
borrowings on the Company's line of credit, or the private or public placement
of equity securities.

In addition, the Company is developing nine facilities that can be used
by PSPUD. The Company has incurred $34.7 million with respect to these
facilities at June 30, 1999, with remaining costs to complete of $35.5 million.

REIT STATUS: The Company believes that it has operated, and intends to
continue to operate, in such a manner as to qualify as a REIT under the Internal
Revenue Code of 1986, but no assurance can be given that it will at all times so
qualify. To the extent that the Company continues to qualify as a REIT, it will
not be taxed, with certain limited exceptions, on the taxable income that is
distributed to its shareholders, provided that at least 95% of its taxable
income is so distributed prior to filing of the Company's tax return. The
Company has satisfied the REIT distribution requirement since 1980.

FUNDS FROM OPERATIONS: Total funds from operations or "FFO" increased
to $202,745,000 for the six months ended June 30, 1999 compared to $158,586,000
for the same period in 1998. FFO available to common shareholders (after
deducting preferred stock dividends) increased to $157,391,000 for the six
months ended June 30, 1999 compared to $118,317,000 for the same period in 1998.
FFO means net income or (loss) (computed in accordance with generally accepted
accounting principles) before: (i) gain or (loss) on early extinguishment of
debt, (ii) minority interest in income and (iii) gain or (loss) on the
disposition of real estate, adjusted as follows: (i) plus depreciation and
amortization (including the Company's pro-rata share of depreciation and
amortization of unconsolidated equity interests and amortization of assets
acquired in a merger, including property management agreements and goodwill),
and (ii) less FFO attributable to minority interest.

FFO is a supplemental performance measure for equity REITs as defined
by the National Association of Real Estate Investment Trusts, Inc. ("NAREIT").
The NAREIT definition does not specifically address the treatment of minority
interest in the determination of FFO or the treatment of the amortization of
property management agreements and goodwill. In the case of the Company, FFO
represents amounts attributable to its shareholders after deducting amounts
attributable to the minority interests and before deductions for the
amortization of property management agreements and goodwill. FFO is presented
because management, as well as many industry analysts consider FFO to be one
measure of the performance of the Company and it is used in establishing the
terms of the Class B Common Stock. FFO does not take into consideration capital
improvements, scheduled principal payments on debt, distributions and other
obligations of the Company. Accordingly, FFO is not a substitute for the
Company's cash flow or net income (as discussed above) as a measure of the
Company's liquidity or operating performance. FFO is not comparable to similarly
entitled items reported by other REITs that do not define it exactly as the
Company defines it.

IMPACT OF YEAR 2000
-------------------

The Company has completed an assessment of all of its hardware and
software applications to identify susceptibility to what is commonly referred to
as the "Y2K Issue" whereby certain computer programs have been written using two
digits rather than four to define the applicable year. Any of the Company's
computer programs or hardware with the Y2K Issue that have date-sensitive
applications or embedded chips may recognize a date using "00" as the year 1900
rather than the year 2000, resulting in miscalculations or system failure
causing disruptions of operations.

The Company has two phases in its process with respect to each of its
systems; i) assessment, whereby the Company evaluates whether the system is Y2K
compliant and identifies the plan of action with respect to remediating any Y2K
issues identified and ii) implementation, whereby the Company completes the plan
of action prepared in the assessment phase and verifies that Y2K compliance has
been achieved.

Implementations have been completed on the Company's critical
applications that impact the Company, such as the general ledger, property
operations, and related systems. Contingency plans have been developed for use
in case the Company's assessment did not identify all Y2K issues, or if the
implementation were subsequently determined to not fully remediate Y2K issues
that were identified. While the Company presently believes that the impact of
the Y2K Issue on its systems can be mitigated, if the Company's plan for
ensuring Year 2000 compliance and the related contingency plans were to fail, be
insufficient, or not be implemented on a timely basis, Company operations could
be materially impacted.

Certain of the Company's other non-computer related systems that may be
impacted by the Y2K Issue, such as security systems, have been evaluated. The
Company expects the implementation of the required solutions to be completed in
advance of December 31, 1999. Based upon its evaluation, the Company has no
reason to believe that lack of compliance or failure of required solutions would
materially impact the Company's operations.

The Company exchanges electronic data with certain outside vendors in
the banking and payroll processing areas. The Company has been advised by these
vendors that their systems are or will be Year 2000 compliant, but has requested
a Year 2000 compliance certification from these entities. The Company is not
aware of any other vendors, suppliers, or other external agents with a Y2K Issue
that would materially impact the Company's results of operations, liquidity, or
capital resources. However, the Company has no means of ensuring that external
agents will be Year 2000 compliant, and there can be no assurance that the
Company has identified all such external agents. The inability of external
agents to complete their Year 2000 compliance process in a timely fashion could
materially impact the Company. The effect of non-compliance by external agents
is not determinable.

The cost of the Company's year 2000 compliance activities (which
primarily consists of the costs of new systems) is estimated at approximately
$4.2 million, of which approximately $4.0 million has been incurred to date.
These costs are capitalized. The Company's year 2000 compliance efforts have not
resulted in any significant deferrals in other information system projects.

The costs of the projects and the date on which the Company expects to
achieve Year 2000 Compliance are based upon management's best estimates, and
were derived utilizing numerous assumptions of future events. There can be no
assurance that these estimates will be achieved, and actual results could differ
materially from those anticipated. There can be no assurance that the Company
has identified all potential Y2K Issues either within the Company or at external
agents. In addition, the impact of the Y2K issue on governmental entities and
utility providers and the resultant impact on the Company, as well as
disruptions in the general economy, may be material but cannot be reasonably
determined or quantified.

Item 3. Qualitative and Quantitative Disclosures about Market Risk
----------------------------------------------------------

To limit the Company's exposure to market risk, the Company principally
finances its operations and growth with permanent equity capital consisting
either of common or preferred stock. At June 30, 1999, the Company's debt as a
percentage of total shareholders' equity (based on book values) was 4.6%.

The Company's preferred stock is not redeemable by the holders. Except
under certain conditions relating to the Company's qualification as a REIT, the
Senior Preferred Stock is not redeemable by the Company prior to the following
dates: Series A - September 30, 2002, Series B - March 31, 2003, Series C - June
30, 1999, Series D - September 30, 2004, Series E - January 31, 2005, Series F -
April 30, 2005, Series G - December 31, 2000, Series H - January 31, 2001,
Series I - October 31, 2001, Series J - August 31, 2002, Series K - January 19,
2004, and Series L - March 10, 2004. On or after the respective dates, each of
the series of Senior Preferred Stock will be redeemable at the option of the
Company, in whole or in part, at $25 per share (or depositary share in the case
of the Series G, Series H, Series I, Series J, Series K, and Series L), plus
accrued and unpaid dividends.

The Company's market risk sensitive instruments include notes payable
which totaled $172.6 million at June 30, 1999. Substantially all of the
Company's notes payable bear interest at fixed rates. See Item 2 - Management's
Discussion and Analysis of Financial Condition and Results of Operations -
Liquidity and Capital Resources for approximate principal maturities of the
notes payable as of June 30, 1999.

PART II. OTHER INFORMATION

Item 1 Legal Proceedings
-----------------

Anderson v. Public Storage, Inc., San Francisco Superior Court (filed September
- --------------------------------------------------------------------------------
19, 1997)
- ---------
Grant v. Public Storage, Inc., San Diego Superior Court (filed October 6, 1997)
- -------------------------------------------------------------------------------
Wren v. Public Storage, Inc., San Francisco Superior Court (filed October 16,
- --------------------------------------------------------------------------------
1997)
- -----

Each of the plaintiffs in these cases is suing the Company on behalf of
a purported class of California tenants who rented storage spaces from the
Company and contends that the Company's fees for late payments under its rental
agreements for storage space constitute unlawful "penalties" under the
liquidated damages provisions of California law and under California's unfair
business practices act. None of the plaintiffs has assigned any dollar amount to
the claims.

In February 1998, the lower court dismissed the Anderson case, but in
May 1999 the court of appeal reversed the lower court's dismissal of the
plantiff's claim under the California unfair business practices act and affirmed
the dismissal under the liquidated damages provisions of California law. The
Company is continuing to vigorously contest the claims in all three legal
proceedings.

Grinnel v.Public Storage, Inc., Baltimore City Circuit Court (filed August 4,
- ---------------------------------
1999)

Plaintiff in this case is suing the Company on behalf of a purported
class of Maryland tenants who rented storage spaces from the Company and
contends that the Company's fees for late payments under its rental agreements
for storage space exceeds the amount of interest that can be charged under the
Maryland constitution and are therefore unlawful "penalties." None of the
plaintiffs has assigned any dollar amount to the claims.
The Company intends to vigorously contest the claims in the proceedings.

In addition, the Company is a party to various claims, complaints and
other legal actions that have arisen in the normal course of business from time
to time. The Company believes the outcome of these pending legal proceedings, in
the aggregate, will not have a material adverse effect on the operations or
financial position of the Company.

Item 4. Submission of Matters to a Vote of Security Holders
---------------------------------------------------

The Company held an annual meeting of shareholders on May 6, 1999.
Proxies for the annual meeting were solicited pursuant to Regulation 14 under
the Securities Exchange Act of 1934. The annual meeting involved the following
matters:

1. Approval of an amendment to the Company's bylaws to change the
authorized number of directors from a range of five to nine to
a range of eight to fifteen, with the exact number of
directors to be initially fixed at ten - approval of this
proposal required the affirmative vote of the holders of a
majority of the Company's outstanding shares of Common Stock,
and this proposal was approved by the following vote

For Against Abstain No Vote
---------- ---------- ---------- ----------
Common Stock 89,727,720 2,409,659 383,731 6,906,291

2. Election of Directors

Number of Shares of Common Stock
-----------------------------------------
Name Voted For Withheld
- ----------------------- ----------------- -----------------
B. Wayne Hughes 93,367,996 6,059,408
Harvey Lenkin 98,648,295 779,109
Marvin M. Lotz 98,619,879 807,525
B. Wayne Hughes, Jr. 95,956,555 3,470,849
Robert J. Abernethy 98,882,492 544,912
Dann V. Angeloff 98,645,940 781,464
William C. Baker 98,871,031 556,373
Thomas J. Barrack, Jr. 91,787,227 7,640,177
Uri P. Harkham 98,877,077 550,327
Daniel C. Staton 98,701,641 725,763

Item 6 Exhibits and Reports on Form 8-K
--------------------------------

(a) Exhibits:

3.1 Restated Articles of Incorporation. Filed with Registrant's
Registration Statement No. 33-54557 and incorporated herein
by reference.

3.2 Certificate of Determination for the 10% Cumulative
Preferred Stock, Series A. Filed with Registrant's
Registration Statement No. 33-54557 and incorporated herein
by reference.

3.3 Certificate of Determination for the 9.20% Cumulative
Preferred Stock, Series B. Filed with Registrant's
Registration Statement No. 33-54557 and incorporated herein
by reference.

3.4 Amendment to Certificate of Determination for the 9.20%
Cumulative Preferred Stock, Series B. Filed with
Registrant's Registration Statement No. 33-56925 and
incorporated herein by reference.

3.5 Certificate of Determination for the 8.25% Convertible
Preferred Stock. Filed with Registrant's Registration
Statement No. 33-54557 and incorporated herein by reference.

3.6 Certificate of Determination for the Adjustable Rate
Cumulative Preferred Stock, Series C. Filed with
Registrant's Registration Statement No. 33-54557 and
incorporated herein by reference.

3.7 Certificate of Determination for the 9.50% Cumulative
Preferred Stock, Series D. Filed with Registrant's Form
8-A/A Registration Statement relating to the 9.50%
Cumulative Preferred Stock, Series D and incorporated herein
by reference.

3.8 Certificate of Determination for the 10% Cumulative
Preferred Stock, Series E. Filed with Registrant's Form
8-A/A Registration Statement relating to the 10% Cumulative
Preferred Stock, Series E and incorporated herein by
reference.

3.9 Certificate of Determination for the 9.75% Cumulative
Preferred Stock, Series F. Filed with Registration's Form
8-A/A Registration Statement relating to the 9.75%
Cumulative Preferred Stock, Series F and incorporated herein
by reference.

3.10 Certificate of Determination for the Convertible
Participating Preferred Stock. Filed with Registrant's
Registration Statement No. 33-63947 and incorporated herein
by reference.

3.11 Certificate of Amendment of Articles of Incorporation. Filed
with Registrant's Registration Statement No. 33-63947 and
incorporated herein by reference.

3.12 Certificate of Determination for the 8-7/8% Cumulative
Preferred Stock, Series G. Filed with Registration's Form
8-A/A Registration Statement relating to the Depositary
Shares Each Representing 1/1,000th of a Share of 8-7/8%
Cumulative Preferred Stock, Series G and incorporated herein
by reference.

3.13 Certificate of Determination for the 8.45% Cumulative
Preferred Stock, Series H. Filed with Registrant's Form
8-A/A Registration Statement relating to the Depositary
Shares Each Representing 1/1,000th of a Share of 8.45%
Cumulative Preferred Stock, Series H and incorporated herein
by reference.

3.14 Certificate of Determination for the Convertible Preferred
Stock, Series CC. Filed with Registrant's Registration
Statement No. 333-03749 and incorporated herein by
reference.

3.15 Certificate of Correction of Certificate of Determination
for the Convertible Participating Preferred Stock. Filed
with Registrant's Registration Statement No. 333-08791 and
incorporated herein by reference.

3.16 Certificate of Determination for 8-5/8% Cumulative Preferred
Stock, Series I. Filed with Registrant's Form 8-A/A
Registration Statement relating to the Depositary Shares
Each Representing 1/1,000 of a Share of 8-5/8% Cumulative
Preferred Stock, Series I and incorporated herein by
reference.

3.17 Certificate of Amendment of Articles of Incorporation. Filed
with Registrant's Registration Statement No. 333-18395 and
incorporated herein by reference.

3.18 Certification of Determination for Equity Stock, Series A.
Filed with Registrant's Form 10-Q for the quarterly period
ended June 30, 1997 and incorporated herein by reference.

3.19 Certification of Determination for 8% Cumulative Preferred
Stock, Series J. Filed with Registrant's Form 8-A/A
Registration Statement relating to the Depositary Shares
Each Representing 1/1,000 of a Share of 8% Cumulative
Preferred Stock, Series J and incorporated herein by
reference.

3.20 Certificate of Correction of Certificate of Determination
for the 8.25% Convertible Preferred Stock. Filed with
Registrant's Registration Statement No. 333-61045 and
incorporated herein by reference.

3.21 Certification of Determination for 8-1/4% Cumulative
Preferred Stock, Series K. Filed with Registrant's Form
8-A/A Registration Statement relating to the Depositary
Shares Each Representing 1/1,000 of a Share of 8-1/4%
Cumulative Preferred Stock, Series K and incorporated herein
by reference.

3.22 Certificate of Determination for 8-1/4% Cumulative Preferred
Stock, Series L. Filed with Registrant's Form 8-A/A
Registration Statement relating to the Depositary Shares
Each Representing 1/1,000 of a Share of 8-1/4% Cumulative
Preferred Stock, Series L and incorporated herein by
reference.

3.23 Bylaws, as amended. Filed with Registrant's Registration
Statement No. 33-64971 and incorporated herein by reference.

3.24 Amendment to Bylaws adopted on May 9, 1996. Filed with
Registrant's Registration Statement No. 333-03749 and
incorporated herein by reference.

3.25 Amendment to Bylaws adopted on June 26, 1997. Filed with
Registrant's Registration Statement No. 333-41123 and
incorporated herein by reference.

3.26 Amendment to Bylaws adopted on January 6, 1998. Filed with
Registrant's Registration Statement No. 333-41123 and
incorporated herein by reference.

3.27 Amendment to Bylaws adopted on February 10, 1998. Filed with
Registrant's Current Report on Form 8-K dated February 10,
1998 and incorporated herein by reference.

3.28 Amendment to Bylaws adopted on March 4, 1999. Filed with
Registrant's Current Report on Form 8-K dated March 4, 1999
and incorporated herein by reference.

3.29 Amendment to Bylaws adopted on May 6, 1999. Filed with
Registrant's Form 10-Q for the quarterly period ended March
31, 1999 and incorporated herein by reference.

10.1 Second Amended and Restated Management Agreement by and
among Registrant and the entities listed therein dated as of
November 16, 1995. Filed with PS Partners, Ltd.'s Annual
Report on Form 10-K for the year ended December 31, 1996 and
incorporated herein by reference.

10.2 Amended Management Agreement between Registrant and Public
Storage Commercial Properties Group, Inc. dated as of
February 21, 1995. Filed with Registrant's Annual Report on
Form 10-K for the year ended December 31, 1994 and
incorporated herein by reference.

10.3 Loan Agreement between Registrant and Aetna Life Insurance
Company dated as of July 11, 1988. Filed with Registrant's
Current Report on Form 8-K dated July 14, 1988 and
incorporated herein by reference.

10.4 Amendment to Loan Agreement between Registrant and Aetna
Life Insurance Company dated as of September 1, 1993. Filed
with Registrant's Annual Report on Form 10-K for the year
ended December 31, 1993 and incorporated herein by
reference.

10.5 Second Amended and Restated Credit Agreement by and among
Registrant, Wells Fargo Bank, National Association, as
agent, and the financial institutions party thereto dated as
of February 25, 1997. Filed with Registrant's Registration
Statement No. 333-22665 and incorporated herein by
reference.

10.6 Note Assumption and Exchange Agreement by and among Public
Storage Management, Inc., Public Storage, Inc., Registrant
and the holders of the notes dated as of November 13, 1995.
Filed with Registrant's Registration Statement No. 33-64971
and incorporated herein by reference.

10.7 Registrant's 1990 Stock Option Plan. Filed with Registrant's
Annual Report on Form 10-K for the year ended December 31,
1994 and incorporated herein by reference.

10.8 Registrant's 1994 Stock Option Plan. Filed with Registrant's
Annual Report on Form 10-K for the year ended December 31,
1997 and incorporated herein by reference.

10.9 Registrant's 1996 Stock Option and Incentive Plan. Filed
with Registrant's Annual Report on Form 10-K for the year
ended December 31, 1997 and incorporated herein by
reference.

10.10 Agreement and Plan of Reorganization among Registrant,
Public Storage Properties IX, Inc., and PS Business Parks,
Inc. dated as of December 13, 1995. Filed with Registrant's
Registration Statement No. 333-00591 and incorporated herein
by reference.

10.11 Deposit Agreement dated as of December 13, 1995, among
Registrant, The First National Bank of Boston, and the
holders of the depositary receipts evidencing the Depositary
Shares Each Representing 1/1,000 of a Share of 8-7/8
Cumulative Preferred Stock, Series G. Filed with
Registrant's Form 8-A/A Registration Statement relating to
the Depositary Shares Each Representing 1/1000th of a Share
of 8-7/8 Cumulative Preferred Stock, Series G and
incorporated herein by reference.

10.12 Deposit Agreement dated as of January 25, 1996, among
Registrant, The First National Bank of Boston, and the
holders of the depositary receipts evidencing the Depositary
Shares Each Representing 1/1,000 of a Share of 8.45%
Cumulative Preferred Stock, Series H. Filed with
Registrant's Form 8-A/A Registration Statement relating to
the Depositary Shares Each Representing 1/1000th of a Share
of 8.45% Cumulative Preferred Stock, Series H and
incorporated herein by reference.

10.13 Employment Agreement between Registrant and B. Wayne Hughes
dated as of November 16, 1995. Filed with Registrant's
Annual Report on Form 10-K for the year ended December 31,
1995 and incorporated herein by reference.

10.14 Deposit Agreement dated as of November 1, 1996, among
Registrant, The First National Bank of Boston, and the
holders of the depositary receipts evidencing the Depositary
Shares Each Representing 1/1,000 of a Share of 8-5/8%
Cumulative Preferred Stock, Series I. Filed with
Registrant's Form 8-A/A Registration Statement relating to
the Depositary Shares Each Representing 1/1000th of a Share
of 8-5/8% Cumulative Preferred Stock, Series I and
incorporated herein by reference.

10.15 Agreement and Plan of Reorganization among Registrant,
Public Storage Properties XIV, Inc. and, Public Storage
Properties XV, Inc. dated as of December 5, 1996. Filed with
Registrant's Registration Statement No. 333-22665 and
incorporated herein by reference.

10.16 Agreement and Plan of Reorganization among Registrant,
Public Storage Properties XVI, Inc., Public Storage
Properties XVII, Inc., Public Storage Properties XVIII, Inc.
and Public Storage Properties XIX, Inc. dated as of April 9,
1997. Filed with Registrant's Registration Statement No.
333-26959 and incorporated herein by reference.

10.17 Limited Partnership Agreement of PSAF Development Partners,
L. P. between PSAF Development, Inc. and the Limited Partner
dated as of April 10, 1997. Filed with Registrant's Form
10-Q for the quarterly period ended March 31, 1997 and
incorporated herein by reference.

10.18 Deposit Agreement dated as of August 28, 1997 among
Registrant, The First National Bank of Boston, and the
holders of the depositary receipts evidencing the Depositary
Shares Each Representing 1/1,000 of a Share of 8% Cumulative
Preferred Stock, Series J. Filed with Registrant's Form
8-A/A Registration Statement relating to the Depositary
Shares Each Representing 1/1,000 of a Share of 8% Cumulative
Preferred Stock, Series J and incorporated herein by
reference.

10.19 Agreement and Plan of Reorganization between Registrant and
Public Storage Properties XX, Inc. dated as of December 13,
1997. Filed with Registrant's Registration Statement No.
333-49247 and incorporated herein by reference.

10.20 Agreement of Limited Partnership of PS Business Parks, L. P.
dated as of March 17, 1998. Filed with PS Business Parks,
Inc.'s Quarterly Report on Form 10-Q for the quarterly
period ended June 30, 1998 and incorporated herein by
reference.

10.21 Deposit Agreement dated as of January 19, 1999 among
Registrant, BankBoston, N. A. and the holders of the
depositary receipts evidencing the Depositary Shares Each
Representing 1/1,000 of a Share of 8-1/4% Cumulative
Preferred Stock, Series K. Filed with Registrant's Form
8-A/A Registration Statement relating to the Depositary
Shares Each Representing 1/1,000 of a Share of 8-1/4%
Cumulative Preferred Stock, Series K and incorporated herein
by reference.

10.22 Agreement and Plan of Merger among Storage Trust Realty,
Registrant and Newco Merger Subsidiary, Inc. dated as of
November 12, 1998. Filed with Registrant's Registration
Statement No. 333-68543 and incorporated herein by
reference.

10.23 Amendment No. 1 to Agreement and Plan of Merger among
Storage Trust Realty, Registrant, Newco Merger Subsidiary,
Inc. and STR Merger Subsidiary, Inc. dated as of January 19,
1999. Filed with Registrant's Registration Statement No.
333-68543 and incorporated herein by reference.

10.24 Amended and Restated Agreement of Limited Partnership of
Storage Trust Properties, L. P., dated as of March 12, 1999.
Filed herewith.

10.25 Storage Trust Realty 1994 Share Incentive Plan. Filed with
Storage Trust Realty's Annual Report on Form 10-K for the
year ended December 31, 1997 and incorporated herein by
reference.

10.26 Amended and Restated Storage Trust Realty Retention Bonus
Plan effective as of November 12, 1998. Filed with
Registrant's Registration Statement No. 333-68543 and
incorporated herein by reference.

10.27 Deposit Agreement dated as of March 10, 1999 among
Registrant, Bank Boston, N.A. and the holders of the
depositary receipts evidencing the Depositary Shares Each
Representing 1/1,000 of a Share of 8-1/4% Cumulative
Preferred Stock, Series L. Filed with Registrant's Form
8-A/A Registration Statement relating to the Depositary
Shares Each Representing 1/1,000 of a Share of 8-1/4%
Cumulative Preferred Stock, Series L and incorporated herein
by reference.

10.28 Note Purchase Agreement and Guaranty Agreement with respect
to $100,000,000 of Senior Notes of Storage Trust Properties,
L.P. Filed with Storage Trust Realty's Annual Report on Form
10-K for the year ended December 31, 1996 and incorporated
herein by reference.

11 Statement re: Computation of Earnings Per Share. Filed
herewith.

12 Statement re: Computation of Ratio of Earnings to Fixed
Charges. Filed herewith.

27 Financial data schedule. Filed herewith.

(b) Reports on Form 8-K

No reports on Form 8-K were filed by the Company during the
quarter ended June 30, 1999.

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934,
the Registrant has duly caused this report to be signed on its behalf
by the undersigned thereunto duly authorized.

DATED: August 13, 1999

PUBLIC STORAGE, INC.

BY: /s/ John Reyes
--------------
John Reyes
Senior Vice President and Chief Financial Officer
(Principal financial officer and duly authorized
officer)